The cost of doing business in Kirksville

Saturday

Oct 27, 2012 at 9:48 AMOct 27, 2012 at 9:55 AM

Low cost of living, high-quality people help make Kirksville area marketable .

Taylor Muller

Editor’s note: This is the fourth in a series of articles examining the local economy. The first installment, covering local manufacturing, appeared Sept. 30. The second, examining the Highway 63 bypass’ impact on Baltimore Street businesses, appeared Oct. 7. The third, investigating vacant commercial spaces, appeared Oct. 21. The next story in the series will be published in Nov. 18.—————Kirksville and Adair County’s low cost of living has more impact than just on family’s pocketbooks, with the relatively low utilities and wages helping bring down the cost of doing business in northeast Missouri.

Adair County is helped by both its low average wages but also lower rates for utilities and other expenses compared to the state or Midwest, offsetting some of the potentially higher costs for freight and shipping that are necessitated by its remote location.

But despite the statistics and figures showing the lower costs and benefits of starting or running a business in northeast Missouri, it was the intangible elements - residents’ respect and support, the close-knit community and supportive business relationships - that several local employers said made Adair County an ideal business home.

Good work for the priceKirksville and Adair County benefit from the fact the area is paid a lower hourly wage than elsewhere in the state, especially urban centers like Kansas City and St. Louis. Kirksville also lags those metro areas in education attainment levels, most notably in high school diplomas, but narrows the gap in four-year degree holders.

The percentage of the Kirksville population with at least a high school diploma, a potential indicator of more permanent residents, increased from 2000 to 2010, according to Census reports.

The U.S. Census Bureau reported most recently that about 88 percent of Kirksville’s adult population had a high school diploma or equivalent, up from 84.8 percent in 2000.

That puts the Kirksville region ahead of the rest of the state in both measures, with Missouri reporting 87.6 percent of the population had a high school diploma or equivalency and 26.1 percent had a bachelor’s degree or higher in 2011.

But for the cost, Adair County and its educated workforce come cheaply, in fact more cheaply than three of its neighboring counties which rely more heavily on agriculture income and jobs.

Across Adair County, the average wage, without accounting for public or governmental positions, was $12.13 an hour for 2011, according to the Missouri Economic Research and Information Center. That is lower than the average wages paid in Sullivan ($15.57), Linn ($14.57) and Macon ($12.73) counties for private sector jobs.

Carolyn Chrisman, director of economic development with Kirksville Regional Economic Development, Inc., said those counties’ average wages were likely boosted by relatively higher farming incomes paired with lower populations.

“It’s also important to look at the number of workers,” she said. “We [in Adair County] have more workers. Our entire county population is 26,000 while Macon County’s population is 15,000, so we’ll have more of those [lower-income workers] that make less per hour rather than Macon County and its factories and manufacturing jobs, which tend to pay more.”

So, while Kirksville may not match up dollar for dollar to northeast Missouri, it still ranks higher than Putnam, Schuyler, Scotland and Knox counties’ average wages while still boasting a higher education level than the region and the state.

Kirksville’s average wage also increases by more than a dollar to $13.24 with the inclusion of public sector jobs, thanks to the city’s extensive education sector.

Low utility costs benefit industry, manufacturingAdair County also benefits from some of the cheapest utilities across the nation, despite paying marginally higher electric and gas rates than other regions in the state due to higher transportation costs.

Ameren Missouri spokesperson Trina Muniz said the company has the lowest electric rates of any publicly-owned utility in the state, one of the many potential costs for someone looking to open a business.

According to a comparison done by the U.S. Department of Energy in 2011, Missouri had lower electricity costs per kilowatt than the average across the Midwest.

Missouri electrical customers pay 8.04 cents per kWh of electricity used for commercial use, 5.95 per kWh for industrial and 9.78 cents per kWh for residential rates. Those rates are lower than Illinois’ and Kansas’ with Iowa besting the state in commercial and industrial rates.

Northeast Missouri’s gas rates are also in line with the rest of the state as of October 2012. Adair County customers paid 0.508 cents per 100 cubic feet of natural gas, or Ccf. That was higher than Liberty Utilities’ lowest rate in western Missouri of 0.4225 Ccf but lower than its Iowa rate of 0.5431 Ccf.

Most utility companies offer reduced rates for industrial customers and especially for large utility users, but slight differences in annual costs can still be substantial in cost of doing business calculations.

But it’s not always strictly about a business’ costs when it comes to the question of whether a location will work for a business. For Trumascape owner John Nolan, it was the ease of forming relationships and getting connected quickly after graduation that kept him in Kirksville to create his landscaping business.

“It was a really difficult decision,” Nolan said of his plan to create a landscaping company out of college in 2010. “I just wasn’t sure there was going to be enough business up here. I didn’t know if they’d have the mindset of increasing their property value through landscaping work.”

Nolan said he figured his raw material costs would be about equal with most suppliers selling across the nation. He knew Kirksville would mean higher costs for shipping and freight, but in the end it was a market niche locally versus his hometown of Joplin that sealed the deal.

“I thought I would do better in Kirksville than in Joplin because I can get plugged in quicker with the movers and shakers,” Nolan said. “You get to know these people and it’s difficult to do that in a bigger town.”

It was also Kirksville and its relatively low cost of living with cheaper rent and grocery costs compared to beyond the Midwest that helped Nolan recruit other Truman State graduates to move back to town.

“These people could have gone out and gotten $30,000, $40,000 or $50,000 jobs, if they’re lucky, or they were able to do what they love here and with the cost of living, you can live pretty OK and actually have more spending money each month,” Nolan said.

While Nolan’s transportation costs account for about a third of his material expenses, Kirksville’s rural location and access to Midwestern agriculture was a plus for the Kraft Foods/Oscar Mayer facility with it sourcing its bacon products from pork raised throughout the region.

Kraft spokesperson Joyce Hodel also highlighted the cost of living and competitive utility rates as two beneficial factors for both the company and its employees.

“Generally, we think Missouri is an attractive place to do business and the fact that Kirksville is one of three facilities we have in Missouri demonstrates that view,” Hodel said. “We have a good relationship with local officials and Kirksville, and we take pride in being a key employer in the community.”

Hodel also said the area’s workforce was also a positive for the facility as part of its outreach efforts and coordination with its education institutions like the Kirksville Area Technical Center.

Something in the waterAt another educational institution and a Kirksville cornerstone for more than 100 years, A.T. Still University considered multiple sites, including Kirksville, for its new dental school in the last two years before eventually choosing its original hometown over Florida or California.

While the costs were considered, it was the intangibles that compelled the ATSU Board of Trustees to choose Kirksville for its next major construction project and new school, said ATSU Board Chair Clyde Evans.

Evans said first and foremost for the board, the decision of where to open shop next came down to the university’s overall mission and support shown at the local and state levels.

“We had to figure out a way to do this new school that would be financially responsible and would not be an undue burden on our resources and had a business plan that was solid and we were confident we could do it in Kirksville without putting the university at jeopardy,” Evans said.

Local contributions totaling $1.1 million and promises of client availability from Missouri’s Community Health Centers joined with a desire to give back to Kirksville in influencing the board’s decision.

“Residents of Kirksville have been so supportive of this university,” Evans said. “To be able to give back specifically to this community, it meant something to us. There are lots of places in this country where there is need.

“I [told the board] there must be something in the water here in Kirksville. I didn’t go to Truman State. I didn’t go to KCOM. I’m not a D.O., but I’ve come to know the university and come to know the people from Kirksville and there is something you can’t quite put your finger on. Something about this school, something about this place in the middle of nowhere.”